What’s Happening? F&F at a Crossroads of Opportunity and Crisis

In March 2025, reports emerged that F&F is considering exercising its ‘right of first refusal’ for TaylorMade, with major players like LVMH and Meritz Securities potentially joining as partners. This move could significantly expand F&F’s business portfolio beyond fashion into the global golf apparel market.

However, F&F officially released a disclosure stating, “Nothing has been confirmed to date,” and announced a follow-up disclosure within six months. This signals a high degree of uncertainty surrounding the M&A, and investors should be wary of premature expectations.

Why? Red Flags in F&F’s Fundamentals

Behind the rosy prospect of the TaylorMade acquisition lies a grim reality for F&F. The Q1 2025 earnings report was a major disappointment for investors.

  • 📉 Collapse of a Key Market: Revenue from its core market, China, plummeted by a staggering 70%. The economic slowdown and weak consumer sentiment in China delivered a direct hit.
  • 💸 Worsening Profitability: On top of the sales decline, rising raw material prices, increased logistics costs, and unfavorable exchange rates (KRW/USD, KRW/CNY) caused operating and net profit margins to fall sharply.
  • ⚠️ Internal Risks: High inventory levels and losses from derivative transactions also eroded profitability.

Attempting a multi-billion dollar M&A while the core business is shaking is a classic ‘high-risk, high-return’ gamble.

So What? 3 Scenarios and Their Potential Impact

F&F’s future stock performance will largely depend on the outcome of the TaylorMade deal. We can outline three possible scenarios:

  • Scenario 1: Successful Acquisition (Best Case)
    F&F successfully acquires TaylorMade at a reasonable price with strong partners like LVMH. In the short term, financial strain from funding the deal and integration challenges are expected. However, in the long term, it could secure a new growth engine and elevate the company to a global player.

  • Scenario 2: Failed or Canceled Acquisition (Worst Case)
    If the deal is ultimately called off, the stock price, which rose on M&A hopes, is likely to fall in the short term. Investor confidence could erode, and the underlying problems of the struggling core business would come back into focus.

  • Scenario 3: Acquisition on Hold (Neutral Case)
    F&F decides to postpone the acquisition, considering the current difficult business environment. The immediate impact on the stock price might be limited, but the fundamental challenge of fixing its poor performance remains.

Investor Action Plan: Should You Invest in F&F Now?

In conclusion, investing in F&F at this moment involves high uncertainty and risk. While the TaylorMade acquisition is an attractive card to play, investors must not forget that the company’s fundamentals are severely compromised.

Therefore, a wise investor should approach with a conservative perspective. Instead of chasing the stock, a strategy of monitoring the following key points and waiting for a clearer picture is advisable:

  • ✅ The Follow-up Disclosure: The most critical piece of information, which will clarify the status and terms of the deal within six months.
  • ✅ Signs of China Market Recovery: Whether the 70% revenue drop in China has bottomed out is key to a fundamental turnaround.
  • ✅ Management Efficiency Efforts: Look for concrete actions from F&F to improve performance, such as better inventory management and cost control.